Deductions u/s 80C – 80C Deduction List – Complete Details Simplified

The Income Tax Department, through deductions u/s 80C, emphasizes the importance of encouraging savings and investments under Chapter VI A of the Income Tax Act. Deductions under Chapter VI-A enables taxpayers to strategically lower their tax burdens. Here, we list out the 80C deduction list and the limit allowed for deduction. It is pertinent to remember that the benefit of this deduction is available only if the assessee has opted for the Old Tax Regime.

Section 80C

Under this section, deductions upto Rs. 1,50,000 is allowed for life insurance premiums, investments in specified instruments such as EPF, PPF, NSC, ELSS and tax saving fixed deposits amongst others that will be elaborated in the 80C deduction list. This deduction from the gross taxable income is available for individuals and HUFs however, the investments in pension funds like the NPS scheme and Atal Pension Yojana are available for deduction only for individuals and not for HUFs.

Deduction u/s 80C for life insurance premium

Under this section, deduction upto Rs. 1,50,000 is allowed for life insurance premium for the life of self, spouse or children (major or minor) for individuals and any member for HUFs. However, there are certain restrictions regarding the amount of premium that can be considered for exemption depending on when the policy was issued as explained hereunder.

Case I – Policy issued before 01.04.2012

The amount of premium for deduction will be restricted to 20% of the actual sum assured.

Case II – Policy issued on or after 01.04.2012

The amount of premium for deduction will be restricted to 10% of the actual sum assured.

Case III – Policy issued on or after 01.04.2013 for persons with disability

The amount of premium for deduction will be restricted to 15% of the actual sum assured for persons with disability or severe disability as per Section 80U or suffering from disease or ailment as specified in Section 80DDB.

80C Deduction List

The assessee can opt for any of the following schemes for tax saving. The 80C deduction list is as under:-

• National Savings Certificate (NSC) investments
• Equity Linked Saving Scheme (ELSS) investments
• National Pension Scheme (NPS) investments
• Public Provident Fund (PPF) investments
• 5 year Fixed Deposits investments
• Employee Provident Fund (EPF) contributions
• Sukanya Samriddhi Yojana (SSY) investments
• Unit Linked Insurance Plan
• Senior Citizens Savings Scheme (SCSS) investments
• Repayment of housing loan principal amount including stamp duty, registration fee, and other expenses
• Payment of tuition fees in favour of any college, school, university, or other educational institutions within India for full-time education for maximum 2 children.

80C Deduction List – Schemes Explained

Employee Provident Fund (EPF):

• Contributions made to EPF by employees are deductible.
• This is a mandatory retirement savings scheme for salaried employees.

Public Provident Fund (PPF):

• Contributions to PPF accounts are eligible for deduction.
• PPF offers long-term investment benefits with a tenure of 15 years.

National Savings Certificate (NSC):

• Investments in NSCs qualify for deduction.
• These certificates have a fixed maturity period and offer assured returns.

Tax-saving Fixed Deposits:

• Fixed deposits with a lock-in period of 5 years with banks and post offices.
• Interest earned is taxable, but the principal amount invested qualifies for deduction.

Senior Citizens Savings Scheme (SCSS):

• Investments in SCSS accounts by senior citizens.
• This scheme offers regular income and tax benefits.

Sukanya Samriddhi Yojana (SSY):

• Contributions to SSY accounts for a girl child.
• This scheme offers attractive interest rates and tax benefits.

Unit Linked Insurance Plans (ULIPs):

• Investments in ULIPs, which offer the dual benefit of insurance and investment.
• These are market-linked insurance products

Equity Linked Savings Scheme (ELSS):

• Investments in ELSS mutual funds.
• These funds have a lock-in period of 3 years and offer potential for high returns.

Principal Repayment of Home Loan:

• Principal repayment of home loans for self-occupied or let-out properties.
• This is apart from the interest deduction available under Section 24

Tuition Fees:

• Tuition fees paid for the education of up to two children.
• This includes only the tuition component and not other expenses like transport or development fees.

National Pension System (NPS):

• Contributions to NPS Tier 1 accounts.
• NPS offers additional benefits under Section 80CCD(1B) for contributions up to ₹50,000.

Infrastructure Bonds:

• Investments in notified infrastructure bonds.
• These bonds typically have a long tenure and offer tax benefits.

Section 80CCC

Section 80CCC of the Income Tax Act provides deductions for contributions made to certain pension funds. This section is specifically aimed at encouraging individuals to save for their retirement. The eligible contributions include contributions to annuity plans of insurance companies for receiving pension after retirement or the plan must be approved by the Insurance Regulatory and Development Authority of India (IRDAI).

The maximum deduction limit under this section is ₹1.5 lakh per financial year. This limit is part of the overall ceiling of ₹1.5 lakh available under Section 80C, 80CCC, and 80 CCD(1) combined.

Section 80CCD(1)

Section 80CCD(1) of the Indian Income Tax Act pertains to deductions allowed for contributions made to the National Pension System (NPS) by individuals. The section applies to both salaried and self-employed individuals who contribute to the NPS.

The maximum deduction allowed under this section is 10% of the salary (for salaried individuals) or 20% of the gross total income (for self-employed individuals), subject to an overall cap of ₹1.5 lakhs. This is part of the overall limit under Section 80C, 80CCC, and 80CCD(1) combined.

Additional Deduction

Beyond the limit mentioned above, an additional deduction of up to ₹50,000 is available under Section 80CCD(1B) for NPS contributions.

Contributions made by the employer to the NPS are also eligible for a deduction under Section 80CCD(2). This is over and above the limits specified in Section 80CCD(1).

Section 80C Deduction List – FAQs

Q1. Can I avail the benefits of Section 80C deductions if I opt for the New Tax Regime?

A1. No, only assessees that are opting for the old tax regime can avail these benefits.

Q2. In how many maximum instruments can I invest for 80C deductions?

A2. The aggregate maximum allowable under this section is Rs. 1,50,000. The assessee can invest in any number of investments as mentioned in the 80C deduction list above, however, the maximum allowable deduction amount will be Rs. 1,50,000.

Q3. Can I claim deduction for insurance premium paid for cars under this section?

A3. No, insurance premium paid for cars is not covered in the 80C deduction list.